The Bespoke Report — Baby Out With The Bathwater
While intraday performance for stocks in the back half of this week was uninspiring at best, the S&P 500 actually closed up on the week. Some of the price action is getting extreme, especially in cyclical sectors around the world. Today 266 stocks in our Chart Scanner closed at new 52-week lows, while just 17 closed at new highs. You can get a good look at the weakness in our asset class performance matrix below.
Is the baby being thrown out with the bathwater? We discuss in detail in this week’s Bespoke Report.
We’ve just published our latest weekly Bespoke Report newsletter, which is available to subscribers across all three of our membership levels. Sign up here to read the report.
To get up to speed on our thoughts regarding the market’s direction going forward, choose any membership option and access this week’s full Bespoke Report newsletter after signing up! You won’t be disappointed. Some of the topics discussed in this week’s report include:
- Does Buying Dips Below the 200-DMA Work?
- The Relationship Between Correlation & Volatility
- Seasonal Patterns In Volatility
- Dire Economic Expectations From Analysts Around The World
- Rolling Over Global Cyclical Economic Indicators
- European Equity Sectors Collapse
- Slow Eurozone Inflation
- Yields Around The World Rise
- Solid But Slowing Manufacturing Data In The US
- A Dearth Of Workers And Rising Turnover
- Weakening Housing Activity
- A One-Off Collapse In The Deficit
- Surging Transportation Costs
- An Economic Cycle Not Likely To End Soon
The Bespoke Report — A Sell-Off of Global Proportions
Wow! That was pretty extreme. After the most severe sell program in the market since the ‘flash crash’ of 2010 sent US equities plunging for a second straight day, the S&P 500 finished at what can only be considered a ridiculously oversold level on Thursday at more than 3.7 standard deviations below its 50-day moving average. For reference, we consider 1-standard deviation below the 50-DMA to be oversold, and two standard deviations to be an ‘extreme’ oversold reading. We’ll let you use your own adjectives to describe a level nearly twice that. To put some perspective on that oversold reading, the last time the S&P 500 was more oversold was August 2015.
So, what now? There’s some good and bad news here, but only time will tell which one plays out. For some added insight, check out this week’s Bespoke Report.
We’ve just published our latest weekly Bespoke Report newsletter, which is available to subscribers across all three of our membership levels. Sign up here to read the report.
To get up to speed on our thoughts regarding the market’s direction going forward, choose any membership option and access this week’s full Bespoke Report newsletter after signing up! You won’t be disappointed. Some of the topics discussed in this week’s report include:
- Extreme Oversold Markets
- China Valuation
- Global Extremes
- Worst Sell Program Since the Flash Crash
- US or International
- Growth vs Value
- Economic Surprises on the Horizon
- Earnings Season Preview – What to Watch For
- Longest Streaks Above 200-DMA
- Market Breadth
- October Parallels
- The Importance of 9.9
The Bespoke Report – Growth Stocks Spooked
This content is for members onlyThe Bespoke Report — Stumbling And Bumbling
While the economy is on good footing and the overall backdrop is reasonably positive for stocks, there’s reason to be a bit cautious. EPS estimates have been rising sharply this year relative to history, and that process may be completing. While it’s not certain that the bar being set by analysts is too high, stocks have gotten a tailwind from stronger earnings estimates all year; if that process goes into reverse, equity market gains would require higher valuation. While possible, this late in the economic cycle and given higher interest rates, it would be prudent to not rush to expectations of the same climb in valuations that we saw earlier in this bull market.
We’ve just published our latest weekly Bespoke Report newsletter, which is available to subscribers across all three of our membership levels. Sign up here to read the report.
To get up to speed on our thoughts regarding the market’s direction going forward, choose any membership option and access this week’s full Bespoke Report newsletter after signing up! You won’t be disappointed. Some of the topics discussed in this week’s report include:
- Why chaos in the headlines doesn’t mean chaos for stocks
- US economy update
- Check in Europe: Italian chaos, slow inflation, but firm credit growth
- Recent global trade and industrial production volumes
- Breakouts in APAC equity indices and some improvements in EM
- Weak earnings reactions since the end of the last earnings season
- Chinese economic data recap
- Review of the Fed rate hike this week and current FOMC thinking
- Improving credit spreads despite high debt-to-GDP levels
- Focus on homebuilders: versus housing data and valuations
- Model Growth Portfolio update
The Bespoke Report — Passing With Flying Colors
School has been back in session for less than a month now, but the S&P 500 already had its first test of the semester and came out passing with flying colors. After breaking out to new highs at the end of August, the S&P 500 pulled back in early September and found support right at its prior highs from January. After holding that level, the S&P 500 has now traded higher on eight of the last ten trading days, rallying to higher highs. It doesn’t get much more textbook than that!
Heading into the week,the DJIA was the only major US index that had yet to take out its January high, but that changed this week as the index closed out the week with four straight days of gains. While most other indices ran into resistance on their first attempts to take out their highs from January, the DJIA just buzzed right through it.
We’ve just published our latest weekly Bespoke Report newsletter, which is available to subscribers across all three of our membership levels. Sign up here to read the report.
To get up to speed on our thoughts regarding the market’s direction going forward, choose any membership option and access this week’s full Bespoke Report newsletter after signing up! You won’t be disappointed. Some of the topics discussed in this week’s report include:
- Index and sector breadth checkup
- US economy update
- What major indicators say about the odds of a recession
- How recent earnings report stack up
- An ‘Industrious’ rally
- Commodities and the Materials sector
- Mutual fund and ETF flows
- High yield spreads
- Rotational forces
- Model Growth Portfolio update